Intellectual Property: Licensing and Joint Venture Profit Strategies

INTELLECTUAL PROPERTY......Page 2
ABOUT THE AUTHORS......Page 8
ACKNOWLEDGMENTS......Page 10
CONTENTS......Page 12
Preface......Page 18
1 Emergence of Intellectual Property Exploitation Strategies......Page 24
1.1 Factors Driving Strategic Alliances: Time, Cost, and Risk......Page 25
1.2 A Short History of Corporate Strategies......Page 28
1.4 Onward......Page 31
2.1 Some History......Page 32
2.2 Enter Technological Change......Page 33
2.3 Business Enterprise Model......Page 34
2.4 Economics of Exploitation......Page 39
2.5 Development of Intellectual Property......Page 41
2.6 Source of Production Factors......Page 43
2.7 Internal Strategies......Page 44
2.8 The Entrepreneuring Corporation......Page 45
2.9 Acquisition......Page 46
2.10 External Strategies......Page 47
2.11 Ownership Alliances......Page 52
2.12 Other Liquidity Concerns......Page 54
2.13 Establishing a Cross-ownership Alliance......Page 56
2.14 Strategic Alliances—Rapid Technological Change......Page 57
2.15 Summary......Page 60
3 Introduction to the History and Economics of Legal Limits on Licensing Intellectual Property Rights......Page 61
3.1 A Brief History of the Legal Limits on Licensing......Page 62
3.2 The Economic Principles Underlying Legal Limits on Licensing Patent and Related Rights......Page 65
3.3 The Basic Options of Intellectual Property Owners......Page 72
3.4 The Law and the Basic Options of Intellectual Property Owners......Page 73
4.1 Eastman Kodak......Page 79
4.2 Apple Computer......Page 84
4.4 Avoiding a Free-For-All......Page 85
4.5 Free Access Can Still be Profitable......Page 86
5.1 Underlying Theory......Page 88
5.2 Essential Ingredients......Page 92
5.3 Discounted Cash Flow......Page 93
5.4 Application to Intellectual Property......Page 98
5.5 When Specific Data is Unavailable......Page 99
5.6 Summary......Page 104
6 Economic Contributions of Intellectual Property......Page 105
6.3 Enhanced Profits and Intellectual Property......Page 106
6.4 Investment Rate of Return Analysis......Page 112
6.5 Discounted Cash Flow Analysis......Page 118
6.6 Comparable License Transactions......Page 124
6.7 Simplistic Rules of Thumb......Page 128
7.1 Introduction......Page 130
7.2 History of the Rule......Page 131
7.3 Explanation of the Rule......Page 132
7.4 Illustration of the Rule......Page 134
7.5 Application of the Rule......Page 136
7.6 Justification for the Rule......Page 138
7.7 Criticisms of the Rule......Page 139
7.8 Empirical Test of the Rule......Page 141
7.9 Conclusions......Page 147
8.1 Description of the Patented Dermapulse Invention......Page 148
8.2 Financial Review......Page 149
8.3 Intellectual Property Economic Contribution......Page 150
8.4 Analysis of Specific Market Transactions......Page 159
8.5 Conclusion......Page 164
9.1 Georgia-Pacific v. United States Plywood......Page 165
9.2 Summary......Page 171
10.1 Elements of Risk......Page 172
10.2 Risk and Royalties......Page 178
10.3 Intellectual Property Economic Life......Page 182
10.4 Summary......Page 191
11 Licensing Economics and Royalty Rates......Page 192
11.1 Pricing the Alternatives......Page 194
11.2 Licensing......Page 199
11.3 Primary Economic Drivers......Page 201
11.4 Secondary Economic Drivers......Page 218
11.6 Summary......Page 222
12 Dealing with Early-stage Intellectual Property......Page 225
12.1 Early-stage Technology......Page 227
12.2 Development Costs......Page 228
12.3 Risk......Page 231
12.5 The DCF Mechanism......Page 232
12.6 Using DCF as a Measuring Tool......Page 233
13.1 Trademark Royalties......Page 242
13.2 Royalty Quantification......Page 249
14 Licensing Internet Assets......Page 266
14.1 Internet Background......Page 267
14.2 Internet Economics......Page 268
14.3 Internet Licensing......Page 274
15.1 Licensing Negotiations......Page 278
15.2 Licensing Agreements......Page 283
15.4 Licensing-in Technology......Page 286
15.5 Licensing-Out Technology......Page 291
15.6 Conclusion......Page 295
16 Another View of Licensing Strategies......Page 296
16.1 Defensive Strategies......Page 297
16.2 Cost Centers......Page 298
16.3 Profit Centers......Page 299
16.6 Making the Big Bucks......Page 301
16.7 Intellectual Property Touches all Aspects of Life......Page 302
16.8 Intangible Assets at the Center of Deals......Page 304
16.9 E-Commerce and Intellectual Property......Page 305
16.10 Specific Trends In Intellectual Property Deal Making......Page 306
16.11 Trademark Strategies......Page 310
16.12 Intangible Riches......Page 312
17 Joint Venture......Page 313
17.2 Expansion at Overboard Industries, Inc.......Page 315
17.3 Consumer Electronics......Page 316
17.4 Access to the Technology......Page 317
17.5 Access to the Market......Page 318
17.6 Measuring Potential Value from Pin-Point......Page 319
17.7 Weighted Average Cost of Capital......Page 322
17.8 Internal Technology Development......Page 323
17.10 Going it Alone......Page 325
17.11 Summary......Page 328
17.12 Special Problems with Strategic Alliances......Page 330
18 Corporate Acquisition as an Exploitation Strategy......Page 333
18.1 The Acquisition Process......Page 334
18.2 Impact on Intangible Assets and Intellectual Property in a Merger......Page 336
18.3 Focus on Intangibles......Page 338
18.4 Summary......Page 341
19.1 University Technology Transfer Goals......Page 342
19.3 Conflicts of Interest......Page 344
19.4 Nonexclusive Licenses......Page 345
19.6 Rewards of Inventorship......Page 346
19.7 Harvard University—Royalty Sharing Policy for Intellectual Property......Page 347
19.8 Johns Hopkins University—Sharing of Revenue From Intellectual Property......Page 348
19.9 Dealing with Universities......Page 350
20 Global Exploitation Potential......Page 351
20.1 Impact of the International Environment......Page 352
20.2 Accounting Issues......Page 353
20.3 Taxes......Page 354
20.4 Transfer Pricing......Page 356
20.5 Methods for Determining Intangible Asset Transfer Prices......Page 362
20.6 Political Risk......Page 365
20.7 New Markets......Page 366
20.8 Repatriation......Page 367
20.10 Investment Risk......Page 369
20.12 Summary......Page 372
21 Organizing for the Future......Page 373
21.1 Mapping Intellectual Property......Page 374
21.2 Identification......Page 375
21.3 Assembled Workforce......Page 376
21.5 Computer Software......Page 377
21.8 Distribution Networks......Page 378
21.10 Strategic Plan and Gap Analysis......Page 379
22.1 Introduction......Page 386
22.2 Overview of Licensing......Page 387
22.3 Licensing business risks......Page 388
22.4 License Management......Page 390
22.5 “Auditing” the Royalty Obligations......Page 391
22.6 Common Audit Procedures and Findings......Page 393
22.7 Remedies from Breaches of Licensing Contracts......Page 394
22.8 Conclusion......Page 395
A Investment Rate of Return Requirements......Page 396
A.1 Investment Risk......Page 397
A.2 Required Rate of Return Components......Page 398
A.3 Rate of Return Models......Page 399
A.4 Weighted Average Cost of Capital......Page 404
A.5 Suggested Readings......Page 407
B.2 Financial Data......Page 409
B.3 CD-ROM Databases......Page 411
B.6 Sources of Sources......Page 412
C.1 Agriculture......Page 415
C.2 Automotive......Page 416
C.3 Biotechnology......Page 418
C.4 Chemicals......Page 420
C.5 Communications......Page 421
C.6 Computer Hardware......Page 423
C.8 Construction......Page 424
C.9 Electrical and Electronics......Page 425
C.10 Entertainment......Page 426
C.11 Food......Page 428
C.13 Instrumentation......Page 429
C.16 Medical......Page 430
C.17 Novelty......Page 432
C.18 Pharmaceutical......Page 433
C.20 Software......Page 437
C.21 Trademarks and Internet Properties......Page 439
C.22 Waste Treatment Technology......Page 453
C.23 Vending......Page 455
Index......Page 456